Feds: Massive identity theft ring busted

Foreign students from former Soviet bloc countries carried out scheme

San Diego  Fifty-five people, including dozens operating out of San Diego, were indicted in what federal authorities on Thursday called a massive bogus tax-return scheme that netted $7 million and involved the theft of more than 2,000 identities.

The elaborate operation included using foreign students to carry out the scheme in San Diego and elsewhere. Some defendants used code names, prepaid cellphones and disguised computer addresses. One bank employee is accused of setting up accounts to launder fraudulent refunds.

San Diego U.S. Attorney Laura Duffy called the case “staggering in terms of the number of victims, its level of sophistication, its audacious methods and callous disregard for victims.”

After a two-year investigation, authorities arrested 22 suspects during searches Thursday in San Diego, Los Angeles, Las Vegas and Maryland. The searches also turned up $13,000 in cash and four handguns, Duffy said.

Another 33 suspects are at large, she said. Some are out of the country.

Authorities said the ringleaders are Armenians or Armenian-Americans who used foreign nationals from former Soviet bloc countries to carry out the fraud.

The ringleaders knew the foreign nationals — in the U.S. on student, work or travel visas — would not be in the country long. Many have since returned to their home countries, Duffy said.

While in the U.S., the foreign nationals set up post office boxes and bank accounts at San Diego branches. Some of the ill-gotten tax refunds were sent to apartments on El Cajon Boulevard and University Avenue, according to one indictment.

Anthony Orlando, an assistant special agent in charge for the Internal Revenue Service in San Diego, called the scheme “one of the most sophisticated operations we’ve ever seen.”

Most of the other defendants in the indictment are from Kazakhstan, Turkmenistan or Russia, and most of them have not been arrested.

Authorities said the large scheme the trio ran focused on identity theft and about 2,000 bogus tax refunds.

There were essentially two types of refunds — some from purported gambling winnings and losses, and others from made-up job earnings.

To make it harder for authorities to follow their tracks, defendants disguised the computer’s electronic address when they filed bogus tax returns online.

They also used prepaid cellphones and switched them out regularly, according to the indictment.

Authorities said a 21-year-old Glendale resident used her job at Wells Fargo to open bank accounts where some refunds were sent.

Refunds were also funneled to prepaid debit card accounts opened in the names of identify-theft victims.

A second indictment accused three defendants of using stolen identities to file 400 bogus returns.

Another one laid out an elaborate ruse to withdraw large sums of money from wealthy Wells Fargo account holders by recruiting people to pose as those customers, giving them new haircuts and clothes and coaching them on how to act.

They rehearsed answers to potential questions, tried to speak without an accent and practiced forging the signatures of the wealthy bank customers they were impersonating, the indictment said. The imposters ordered tellers to wire large sums of money to a gold dealer, then later picked up gold coins.

The fourth indictment accused 18 people of defrauding Bank of America of more than $600,000 by using stolen identities to write bad checks.

Using stolen identities to commit tax-refund fraud has become such a fast-growing crime it has earned the acronym SIRE, for “stolen identity refund fraud,” Duffy said.

Orlando said the IRS believes similar schemes are going on in the U.S., and the agency has added enforcement resources to investigate them. The agency has also set up a clearinghouse to work with identity theft and tax fraud victims.

“This is a priority for us, something we’ll continue to work on,” Orlando said.